AGRICULTURAL RELIEF
House oF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,
Thursday, February 23, 1928.

The committee met, pursuant to adjournment, at 10 o’clock a. m.,
Hon. Gilbert N. Haugen (chairman) presiding.

PresENT: Representatives Haugen (chairman), Purnell, Williams,
Ketcham, Menges, Andresen, Adkins, Clarke, Aswell. Kincheloe.
Jones, Swank, Fulmer, and Rubey.

The CHAIRMAN. Mr. Andreson, you may proceed.

STATEMENT OF HON. SYDNEY ANDERSON—Concluded
Mr. AxpersoN. Mr. Chairman, before proceeding further with
the analyses I am trying to make of the validity of the President’s
objections to the bill of last Congress, and the extent to which the
present bill meets those objections, I would like to amplify a little
an answer which I made to questions that were asked me last Tuesday.
I had made the statement that the operations of this bill would modify
probably in very marked degree the present methods of marketing
and change the channels through which the commodities were mar-
keted. I was asked in what respect and how that would happen.

Under the present basis of commercial marketing of wheat, wheat
is withdrawn out of the hands of the farmers and out of storage and
elevators and elsewhere In response to the demands of mills, ex-
porters, speculators, and others for particular grades and classes of
wheat. These operations occur on the basis of the profit incentives
of those who purchase and sell the commodity; and, necessarily, take
into consideration the commercial risks involved in the purchase,
sale and storage of the commodity and the manufactured products
that are made out of it.

Now, there is injected into this commercial machinery a new factor
which operates from an entirely different motivation. The agencies
set up by the board and with whom contracts are made, that is,
the cooperative agencies or commercial agencies taking their places,
operate not with the expectation of making a profit, but with the
expectation of making a loss; and to a considerable degree within the
limits of the tariff. The success of their operations depends upon
the amount of losses which they make, that is, the larger the losses
they make the larger apparent success there is on the part of the
operation, because, of course, the only measure there is of the success
of the operation is the difference in the price received for the part of
the crop which is sold abroad and the price that is received for the
part of the crop which is sold for domestic consumption.

Now, just what happens as the consequence of the injection of this
new element, operating on the basis of entirely different motives, in
the flow of grain through the various channels of commerce, depends,
it seems to me, upon what the method of the operation of the board
and these agencies may be. If they operate on the basis of a fixed
price, you have one set of conditions created; if they operate on the
basis of buying at the market and stimulating the price by drawing
off the surplus, then you have another set of conditions. But, in
any event, the principal risks which the private operator takes under
that situation 1s the risk of what the board and these cooperatives